Basic Policy for the Development of Internal Control Systems
Established : May 19, 2006
Last updated : July 1, 2023
The Company and its subsidiaries (hereinafter referred to as ‘the Group’) have established the following
basic policy regarding the development of an internal control system and will establish an appropriateand efficient system by constantly reviewing the administrative authority and division of duties in
response to changes in the business environment and other factors. We will also disclose this basic
policy to the public and make efforts to promote the establishment of a more appropriate and efficientsystem by revising it as necessary through continuous reassessment.
1. System to ensure that the performance of duties by directors and employees complies withlaws and regulations and the Articles of Incorporation① To ensure that directors and employees comply with laws and regulations and the Articles ofIncorporation, and respect social responsibilities and corporate ethics in the execution of their duties,
the Company has established a "Basic Compliance Policy" and ensures that all directors andemployees are familiar with it.
② In order to strengthen the supervisory function and ensure fairness in the execution of duties, twothirds of directors comprising the Board of Directors shall be outside directors who are independent.
③ The Sustainability Promotion Department of the Corporate Management Group is designated as thedepartment in charge of compliance, and is responsible for maintaining and improving thecompliance system. Specifically, in order to improve knowledge and awareness of compliance, theSustainability Promotion Department conducts regular training and prepares and distributes
manuals to directors and employees.
④ The Company has established an internal reporting system for the purpose of early detection andcorrection of acts that violate laws and regulations or the Articles of Incorporation.
⑤ The Company is committed to blocking any and all relationships with antisocial forces. To achievethis, the Company has designated the Business Support Office of the Personnel & General Affairs
Group as the department responsible for dealing with antisocial forces and has established rules andregulations for dealing with such forces, as well as a system to respond resolutely in cooperation
with the police and other external specialized agencies in case of emergency.
⑥ The Audit & Supervisory Committee and the Internal Audit Office work together to regularly audit
and supervise the status of the compliance system and report to the Board of Directors.
2. System for storing and managing information related to the execution of duties by directors
Information related to the execution of duties by directors shall be stored and managed appropriately
and securely for a specified period of time in a form that can be searched and viewed in accordancewith the "Document Management Regulations" and other internal regulations.

3. Regulations and other systems for managing the risk of loss
The "Business Crisis Management Regulations" stipulate the system for managing business risks. Inthe event of a major incident in our business activities, we will establish a task force under the directionof the CEO to respond promptly and appropriately, and have in place a system to minimize loss, damage,etc. In particular, in response to risks related to the handling of personal information, etc., the Company
has appointed a department responsible for information management and an information management
officer to regularly educate employees and conduct internal audits, with the aim of maintaining andimproving the management system based on the Privacy Mark and ISMS conformity assessment
system certifications that have already been acquired.
4. System to ensure efficient execution of duties by directors
In accordance with the decision-making authority stipulated in internal regulations, the CEO, COO, CBO,CIO, CTO, CHO, CFO, service officers and executive managers make careful and flexible decisions. Inaddition, deliberations are held at the Corporate Officers Meeting and at the Strategy Promotion Council
to ensure early recognition of management issues and efficient decision-making by the Board ofDirectors, CEO, COO, CBO, CIO, CTO, CHO, CFO, service officers and executive managers. The Grouphas introduced an executive officer system and a headquarters system for the execution of business
operations, which are carried out efficiently and promptly in accordance with the "Organization
Regulations" and the "Regulations Concerning Division of Duties and Administrative Authority".
5. System to ensure the appropriateness of operations in the Group consisting of the Companyand its subsidiaries① We aim to establish a compliance system for the entire Group by ensuring that the "Basic Policy onCompliance" set forth by the Company is well known throughout the Group.
② The Company dispatches directors or corporate auditors to subsidiaries to audit and supervise theexecution of duties by the directors of the subsidiaries.
③ In the event of transactions among our group companies, we require prior reporting to, and approvalby, the Board of Directors. In approving such transactions, the Board of Directors makes
comparisons with general transaction terms and conditions to avoid arbitrary deliberations andensure that such transactions are not disadvantageous to the Company. In addition, the Company
checks with experts as necessary.
④ The Internal Audit Office conducts internal audits of subsidiaries to ensure the nature of their overalloperations is appropriate.
⑤ In addition to holding regular meetings between the Company and its subsidiaries to share important
information regarding the overall management of the Group companies, the Company approves orreceives reports on the execution of important operations of its subsidiaries in accordance with theregulations concerning the management of subsidiaries.
6. System to Ensure the Appropriateness of Financial Reporting
In order to ensure appropriate financial reporting by the Group, we have established an internal control
system to ensure the effective and appropriate submission of internal control reports based on theFinancial Instruments and Exchange Law, and we continuously evaluate the proper functioning of thesystem and make corrections as necessary.
7. Matters concerning employees who are requested to assist the Audit & Supervisory
Committee in their duties, matters concerning the independence of such employees fromdirectors, and matters concerning ensuring the effectiveness of instructions given to such
employees
At the request or instruction of the Audit & Supervisory Committee, the Company assigns personnel toassist in the execution of duties. In this case, the relevant personnel maintain their independence sothat they do not receive instructions and orders from persons other than Audit & Supervisory
Committee Members, thereby ensuring the effectiveness of the instructions. In addition, regarding
personnel changes, evaluations, etc. of such personnel, the opinion of the Audit & Supervisory
Committee will be respected.
8. System for Directors and Employees to Report to the Audit & Supervisory Board and Other
Systems Related to Reporting
Directors and employees of the Group shall immediately report to the Audit & Supervisory Committeein writing or orally in the event of a fact that causes or is likely to cause significant damage to theGroup, a situation that significantly damages credibility, a serious defect or problem with internalmanagement systems and procedures, misconduct such as violation of laws and regulations, or any
other serious wrongdoing. In addition, Audit & Supervisory Committee Members may freely view theminutes and agenda materials of various meetings such as the Corporate Officers' Meeting at any timeand may request reports from directors and employees of the Group. In addition, the Internal Audit
Office, which is the department in charge of the whistleblowing system, regularly reports to the Audit& Supervisory Committee Members on the status of whistleblowing for the Group.
9. System to ensure that a person who makes a report set forth in the preceding paragraph is
not subjected to any disadvantageous treatment on the basis of such report
The Company stipulates that directors and employees of the Group shall not be treateddisadvantageously because they have reported to the Audit & Supervisory Committee as set forth in
the preceding paragraph, and the Company will respond appropriately to all reports.
10. Matters concerning procedures for advance payment or reimbursement of expenses arisingfrom the execution of duties by Audit & Supervisory Committee Members and other policies
concerning the processing of expenses or liabilities arising from the execution of such duties
When an Audit & Supervisory Committee Member makes a claim to the Company for expenses, etc.
(pursuant to Article 399-2, Paragraph 4 of the Companies Act) incurred during the execution of his/herduties, the Company will honor such request unless it is proved that the request is not necessary forthe execution of duties by the Audit & Supervisory Committee Member.
11. Other systems to ensure that audits by Audit & Supervisory Committee are conductedeffectively① The Audit & Supervisory Committee meets at least once a month.

② Audit & Supervisory Committee Members shall hold meetings as necessary, separate from the Audit& Supervisory Committee.
③ Audit & Supervisory Committee shall meet with the Accounting Auditor or the Internal Audit Office
in a timely manner to exchange opinions and information, and request reports from the Accounting
Auditor or the Internal Audit Office as necessary.
④ Audit & Supervisory Committee receive reports on risks related to the Group through meetings withexperts outside the Company (lawyers, tax accountants, etc.).
Hideki Tomita
Representative Director, President and CEO